The ripples from California’s recent passage of a $15 per hour minimum wage continue to spread across the employment pond. We’ve already seen how it will hit the food service and hotel industries, but one of the most ironic examples of the law of unintended but perfectly predictable consequences may wind up coming from the University of California at Berkeley. With a hat tip to Legal Insurrection, we find that the traditional hotbed for Social Justice Warrior protests – including the Fight for 15 crowd – is going to be feeling the pinch in short order. And it won’t be the well heeled, tenured professors and administrators who will be paying the price. (San Francisco Gate)

Financially troubled UC Berkeley will eliminate 500 staff jobs over two years to help balance its budget by 2019-20, The Chronicle has learned.

Chancellor Nicholas Dirks sent a memo to employees Monday informing them of the job reductions and said they will amount to “a modest reduction of 6 percent of our staff workforce.”…

An estimated $50 million will be saved by eliminating the jobs, Dirks said in the memo, which offered few details.

The news was greeted with anger by some labor union leaders, who criticized Berkeley and the entire UC for what they say is excessive spending on executive salaries at the expense of lower-paid workers.

Oh, yes.. the labor union leaders are upset. Really? Berkeley isn’t even mentioning the real reason for cutting back on the folks who clean the floors, tend the lawns, empty the trash and serve the food, but those on staff are already well aware of what’s driving the decision. As Justin Holcomb reports at Town Hall, the university was already running on a thin margin and they can’t absorb the increased labor costs associated with the new minimum wage law.

The $15 minimum wage hike in California has sent financially troubled UC Berkeley into decision making mode, and “the people who clean buildings, who work in food services or health clinics,” says Todd Stenhouse, will be the ones without a job.

Stenhouse, a spokesman for the American Federation of StateChancellor, also said “There’s a very clear need for those front-line services. But the question is whether there really is a need to hemorrhage resources on executives.”

For those still undecided in this debate among liberals and moderates, Berkeley will likely stand out as the perfect microcosm which demonstrates the “liberal values” driving many of these SJW movements. The loudest proponents for such changes are the intellectual leaders on the left who claim to be fighting for the people. That group certainly includes the professors and chief administrators in academia. But when it comes time to tighten the purse and cut costs you won’t be seeing any of those professors packing their desks up in cardboard boxes and heading for the parking lot. They have tenure and the power of the institution keeping them on the gravy train. Instead it will be the working men and women who take care of all the dirty work (and were supposed to be the beneficiaries of these theories) who will wind up on the unemployment line.

Best of luck to all the hourly workers at Berkeley. I’m sure the climate there is lovely but you might want to consider relocating to a right to work state. Your odds of remaining employed will certainly improve.

_________________The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.- misattributed to Alexis De Tocqueville

No representations made as to the accuracy of info in posted news articles or links

If you’re planning on going to the airport today or even stopping at McDonald’s for a McRib you should probably add a bit of buffer time into your schedule. The “Fight for 15” crowd, in concert with other union activists, are staging another Day of Disruption. In other words, it’s not a protest to get a message out, but rather an orchestrated attempt to shut down the flow of commerce and basic infrastructure. (Fox News)

Workers from fast-food chains and nearly 20 airports joined nationwide protests for higher pay, union rights and immigration reform on Tuesday in their first major action since businessman Donald Trump won the U.S. presidential election.

McDonald’s restaurants in 340 cities are prime rally targets, while baggage handlers and cabin cleaners at Chicago’s O’Hare and Boston’s Logan international airports were to demonstrate in support of workers demanding starting pay of $15 per hour, organizers of the “Fight for $15” campaign said.

More than 200 protesters held a pre-dawn rally in New York City’s Zuccotti Park, about half a block from a McDonald’s restaurant, where they banged on drums and chanted slogans calling for a minimum wage of $15 an hour.

What we’re seeing here is the merging of several liberal attack modes, both old and new, now being repurposed for the next phase of the liberal agenda. In terms of “something old” we have the New York City gathering at Zuccotti Park. In case you weren’t around for their previous antics, that’s where the Occupy Wall Street movement kicked into gear, with makeshift camps full of rape tents and “peaceful protesters” pooping on police cars in the public square. The SEIU sponsored protesters today are moving on from such displays to closing down fast food outlets and trying to slow down if not stop flights at airports. These are the newer tactics of “disruption” which are being taught in liberal protest boot camp these days.

You may recall when the #BlackBrunchNYC plan was hatched and BLM activists went around the Big Apple flooding into eateries and shutting them down with the stated purpose of “disrupting white spaces.” (That must have been a shock to the black and Latino patrons in all of those establishments who were similarly prevented from eating.) More commonly than that, we’ve seen BLM marching onto highways in cities around the nation every time they have anything to protest and shutting down entire interstates for hours on end.

Now the tactics are all being rolled into one and fed into the Fight for 15 crew’s playbook. I was originally tipped off to this event by Jeremy Adler at America Rising Squared. Their statement on this scheme hits all the right notes.

“Big Labor poured hundreds of millions of its dues-paying members’ dollars into this past month’s elections, only to see its chosen candidates lose across the board. From the defeat of Hillary Clinton and so many others who strongly backed the unions’ “Fight for $15” minimum wage campaign, this election should serve as a wake-up call that organized labor’s special-interest agenda doesn’t reflect the values and priorities of working people across America…

“The truth is, today’s protests are not genuine reflection of worker anxiety, but a highly coordinated, well-funded campaign by SEIU union bosses and their PR pros in New York City. Big labor is spending tens of millions of dollars to orchestrate these protests to try and recruit fast-food workers as new dues-payers, filling their shrinking coffers and bolster their depleted membership rolls.

Personally, just as I’ve said with the highway and restaurant stunts pulled by Black Lives Matter, I’m all in favor of some of these protests going forward. Rather then demonstrating in a traditional fashion and getting their message out to potentially supportive members of the public, they will leave a single, vivid memory seared in the minds of all who encounter them. That vision will be of missing out on a lunch meeting or sitting in an endless line of stalled traffic for hours when they’re supposed to be getting home to pick up the kids. Any possible empathy the group might have fostered evaporates at that point.

So you go ahead and “disrupt” the world, guys. Let’s see how far it gets you.

_________________The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.- misattributed to Alexis De Tocqueville

No representations made as to the accuracy of info in posted news articles or links

In a pair of affluent coastal California counties, the canary in the mineshaft has gotten splayed, spatchcocked and plated over a bed of unintended consequences, garnished with sprigs of locally sourced economic distortion and non-GMO, “What the heck were they thinking?”

The result of one early experiment in a citywide $15 minimum wage is an ominous sign for the state’s poorer inland counties as the statewide wage floor creeps toward the mark.

Consider San Francisco, an early adopter of the $15 wage. It’s now experiencing a restaurant die-off, minting jobless hash-slingers, cashiers, busboys, scullery engineers and line cooks as they get pink-slipped in increasing numbers. And the wage there hasn’t yet hit $15.

As the East Bay Times reported in January, at least 60 restaurants around the Bay Area had closed since September alone.

A recent study by Michael Luca at Harvard Business School and Dara Lee Luca at Mathematica Policy Research found that every $1 hike in the minimum wage brings a 14 percent increase in the likelihood of a 3.5-star restaurant on Yelp! closing.

Another telltale is San Diego, where voters approved increasing the city’s minimum wage to $11.50 per hour from $10.50, this after the minimum wage was increased from $8 an hour in 2015 – meaning hourly costs have risen 43 percent in two years.

The cost increases have pushed San Diego restaurants to the brink, Stephen Zolezzi, president of the Food and Beverage Association of San Diego County, told the San Diego Business Journal. Watch for the next mass die-off there.

But what of California’s less affluent inland counties? How will they fare?

Christopher Thornberg, director of UC Riverside’s Center for Economic Forecasting and Development, told the San Bernardino Sun that politicians should have adopted a regional approach. He said it would been better to adapt minimum-wage levels to varying economies – something like the Oregon model, the nation’s first multi-tiered minimum-wage strategy.

Oregon’s minimum-wage law is phased, with increases over six years. By 2022, the minimum will be $14.75 an hour in Portland, $13.50 in midsize counties and $12.50 in rural areas.

“That makes sense,” Thornberg told the Sun. “That’s logical.”

California is even more varied economically than Oregon. Thornberg believes hiking wages in blanket fashion will spark layoffs and edge low-skilled workers out of the job market.

In the Central Valley, wages for all workers, on average, are lower than those of the coastal counties.

U.S. Census Bureau data show about 21 percent of workers in Bakersfield earned from $8 to $12 per hour in 2015, the most recent year for which data was available. In Fresno, 32 percent of workers were in that wage group, and in Modesto about 25 percent. Contrast that with Santa Clara County, home of Silicon Valley, which registered only 12.5 percent at that level.

“Part of our whole concern with (the $15 wage) is it’s a one-size-fits-all,” Rob Lapsley, president of the California Business Roundtable, told The Sacramento Bee last year. “Areas with double-digit unemployment, this is scaring them to death.”

Jamil Dada, chairman of the Riverside County Workforce Development Board, told the Sun that he believed the state’s Inland Empire will be hit harder than other parts of the state.

“It might be tolerable in the coastal regions,” he said. “Their business environment is completely different.”

As politicians insert their sausage fingers into subtle market mechanisms, scarcity and unintended consequences will ensue.

Joining San Francisco’s restaurant die-off was rising star AQ, which in 2012 was named a James Beard Award finalist for the best new restaurant in America. The restaurant’s profit margins went from a reported 8.5 percent in 2012 to 1.5 percent by 2015. Most restaurants are thought to require margins of 3 and 5 percent.

If what’s happening with one early adopter of the $15 wage progression is any indication, locally famous inland hash houses and burger joints from Calexico to the Cow Counties will disappear as mandated wages climb to $15 statewide. And that will only be the start of things.

Jeremy Bagott, a former journalist, writes about California finance and land-use issues. He wrote this for The Modesto Bee.

_________________The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.- misattributed to Alexis De Tocqueville

No representations made as to the accuracy of info in posted news articles or links

Oh, let’s not always see the same hands. Seattle led the way for imposing dramatic increases in the minimum wage to $15 per hour over a span of a few years arguing that it would lift the fortunes of low-wage earners. Several cities and states have followed suit, including Los Angeles, as its main daily notes today while reporting on a study that calls that assumption into serious question. It turns out that low-wage earners might be getting the shaft rather than an elevator:

It’s one of the core questions in the debate over minimum wage: Does hiking the pay floor lead businesses to cut hours and jobs?

A much-anticipated study released Monday by a team of researchers at the University of Washington is likely to intensify that controversy — just as Los Angeles heads toward its own minimum-wage increase for large businesses, from $10.50 an hour to $12 an hour on July 1.

The new study has found that jobs and work hours fell for Seattle’s lowest paid employees after the city raised the minimum wage to $13 last year.

The analysis shows that jobs and hours for those workers declined faster in Seattle than in surrounding control areas, where the minimum wage did not increase.

For those well versed in the laws of supply and demand, especially in the labor market, this isn’t exactly a shock. Opponents of the minimum-wage hikes argued all along that the imposition of artificial extra costs to labor would have significant and unplanned consequences, among them a consolidation of jobs and hours offered, more automation to replace low-skill labor, and a shift away from inexperienced applicants in favor of more skilled workers. According to the study, that’s precisely what happened in Seattle:

Our preferred estimates suggest that the Seattle Minimum Wage Ordinance caused hours worked by low-skilled workers (i.e., those earning under $19 per hour) to fall by 9.4% during the three quarters when the minimum wage was $13 per hour, resulting in a loss of 3.5 million hours worked per calendar quarter. Alternative estimates show the number of low-wage jobs declined by 6.8%, which represents a loss of more than 5,000 jobs. These estimates are robust to cutoffs other than $19.45. A 3.1% increase in wages in jobs that paid less than $19 coupled with a 9.4% loss in hours yields a labor demand elasticity of roughly -3.0, and this large elasticity estimate is robust to other cutoffs.

These results suggest a fundamental rethinking of the nature of low-wage work. Prior elasticity estimates in the range from zero to -0.2 suggest there are few suitable substitutes for low-wage employees, that firms faced with labor cost increases have little option but to raise their wage bill. Seattle data show – even in simple first differences – that payroll expenses on workers earning under $19 per hour either rose minimally or fell as the minimum wage increased from $9.47 to $13 in just over nine months. An elasticity of -3 suggests that low-wage labor is a more substitutable, expendable factor of production. The work of least-paid workers might be performed more efficiently by more skilled and experienced workers commanding a substantially higher wage. This work could, in some circumstances, be automated. In other circumstances, employers may conclude that the work of least-paid workers need not be done at all.

Importantly, the lost income associated with the hours reductions exceeds the gain associated with the net wage increase of 3.1%. Using data in Table 3, we compute that the average low-wage employee was paid $1,897 per month. The reduction in hours would cost the average employee $179 per month, while the wage increase would recoup only $54 of this loss, leaving a net loss of $125 per month (6.6%), which is sizable for a low-wage worker.

It’s not just the scope of the losses, but the losses themselves which are remarkable for the public debate. Advocates of minimum-wage hikes routinely decry the plight of low-wage earners (and not for no good reason), but the impact of this policy doesn’t improve their lives; it actively makes matters worse. As the opportunities for unskilled workers dry up, they have fewer opportunities to earn any living, while the labor market shifts to better-skilled workers who already had an advantage in the marketplace. In the meantime, the added labor costs also will force the cost of living upward, making the decline for unskilled workers even more dramatic.

Needless to say, advocates for minimum-wage hikes will not find this study to their taste, and many are pointing out that it has yet to pass through peer review. It also uses a different methodology than other studies on this policy have used in the past, but that was by design, the Washington Post notes. It’s the first time a study has focused specifically on low-wage workers rather than look at employment in general:

Their studies examined the overall numbers of workers or their annual incomes, but lacked precise information on how much workers were being paid by the hour. As a result, past research might be less reliable because the results might reflect many workers who are not paid low wages, said Jacob Vigdor, an economist at the University of Washington and one of the authors of the new study.

Their research, using detailed records from the state of Washington, addresses that problem.

“That’s really a step beyond what essentially any past studies of the minimum wage have been able to use,” said Jeffrey Clemens, an economist at the University of California, San Diego who was not involved in the research.

And while the study has not undergone a formal peer review yet, it has been reviewed by outside economists — who find it “very credible” indeed:

“This strikes me as a study that is likely to influence people,” said David Autor, an economist at the Massachusetts Institute of Technology who was not involved in the research. He called the work “very credible” and “sufficiently compelling in its design and statistical power that it can change minds.”

Artificially increasing the cost of any commodity will reduce the demand for it, especially with labor in a relatively slack market. It will also incentivize the pursuit of alternatives to labor, which we have begun to see in the casual-dining market already with the advent of automated ordering. The better way to raise wages is to create an economy with strong job creation that lowers the costs of employing people, but unfortunately we have pursued policies for the past eight years that took us in the exact opposite direction — especially with ObamaCare and the employer mandate. Furthermore, raising costs for employers means that consumers pay more for goods and services, an issue which this study doesn’t address at all but which produces even more deleterious effects that impact low-wage earners disproportionally.

Will this study force policymakers to think twice about hiking the minimum wage? As Autor says, “If I were a Seattle lawmaker, I would be thinking hard about the $15 an hour phase-in.” Don’t bet on rational thinking and basic economics to take precedence, though.

_________________The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.- misattributed to Alexis De Tocqueville

No representations made as to the accuracy of info in posted news articles or links

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